First, the reason Sydney, etc. at first had no idea about Melbourne in this tale was because he was settled by people from Tasmania (then called Van Diemen's Land, of course)

What was actually interesting here is that they negotiated with local aboriginal tribes, with an agreement to give yearly gifts for the use of the land as a settlement.
That ended up breaking down because the New South Wales view of things was that that area was already claimed and owned by the crown, meaning the treaty was invalid.
This also meant that Tasmania couldn't really do anything about it when NSW claimed the settlement for themselves.